Drakenstein Municipality has emerged as one of South Africa’s most financially sustainable local governments after completing a multi-year fiscal turnaround that lifted it from 51st place nationally in 2017 to the country’s top five municipalities in the 2025 Municipal Financial Sustainability Index. According to independent ratings agency Ratings Afrika, the Western Cape municipality achieved the strongest improvement recorded over the past six years, reflecting a sustained programme of fiscal discipline, governance reforms and infrastructure investment that has strengthened both service delivery and long-term financial resilience.
The achievement comes as municipalities across South Africa continue to face mounting fiscal pressures driven by weak revenue collection, infrastructure backlogs, rising service delivery costs and constrained public finances. Against this backdrop, Drakenstein’s progress illustrates how disciplined financial management can enhance local government performance while improving the capacity to invest in economic development. According to Ratings Afrika, the municipality implemented a targeted financial turnaround strategy in 2019, steadily improving its national ranking from 51st in 2017 to 34th by 2021 before reaching the top five in the latest assessment. The Municipal Financial Sustainability Index evaluates municipalities using indicators including liquidity management, operating performance, debt governance and infrastructure development, providing an independent measure of financial health across South Africa’s local government sector.
Drakenstein City Manager Johan Leibbrandt said the municipality’s recovery exceeded expectations after several years of consistent financial consolidation. According to Leibbrandt, financial sustainability should ultimately translate into improved public services rather than simply stronger balance sheets. He noted that maintaining healthy municipal finances creates the capacity to expand infrastructure investment, improve service delivery and strengthen economic opportunities for residents. The municipality, which includes the Cape Winelands towns of Paarl and Wellington, has increasingly positioned financial stability as a foundation for long-term development rather than an end in itself.
The municipality’s performance also highlights widening disparities in local government capacity across South Africa. According to Ratings Afrika, the Western Cape remains the country’s only province where municipalities are financially sustainable on average, recording a provincial score of 57 out of 100. Excluding the Western Cape, the national municipal average falls to 27, reflecting persistent operating deficits, liquidity constraints and deteriorating service delivery across many local authorities. The divergence illustrates how governance quality, institutional capacity and fiscal management increasingly determine municipal performance despite operating within the same national policy framework.
For African policymakers, the findings reinforce the growing importance of municipal financial sustainability as urbanisation accelerates across the continent. Cities increasingly carry responsibility for delivering infrastructure, water, sanitation, transport and economic development while simultaneously managing rising debt obligations and climate-related investment requirements. Fiscal resilience at the municipal level is therefore becoming a prerequisite for attracting private capital, supporting public-private partnerships and implementing sustainable urban development strategies.
The municipality’s financial performance has been accompanied by broader governance recognition. According to the Auditor-General of South Africa, Drakenstein recently received its eleventh consecutive clean audit for the 2024/25 financial year, demonstrating sustained compliance with public financial management standards. Good Governance Africa also ranked Drakenstein as South Africa’s highest-performing secondary city in its latest Governance Performance Index, while the municipality received the Gold Award for Best Municipality at the Western Cape Government Service Excellence Awards. Together, these assessments suggest that financial sustainability is closely linked to wider institutional effectiveness, administrative accountability and transparent governance.
Executive Mayor Stephen Korabie described the latest ranking as the product of years of responsible financial management and consistent administrative discipline. His assessment reflects an increasingly recognised principle within public finance: investor confidence, infrastructure quality and service delivery are mutually reinforcing outcomes of sound municipal governance. Municipalities with stronger financial positions are generally better placed to maintain infrastructure, respond to demographic pressures and withstand fiscal shocks without compromising essential public services.
The implications extend beyond South Africa. Across Africa, decentralisation continues to transfer greater development responsibilities to local governments at a time when cities require significant investment to accommodate population growth, industrial expansion and climate adaptation. Development finance institutions, infrastructure investors and sovereign lenders increasingly evaluate municipal governance alongside national fiscal performance when assessing project risks. Local authorities capable of demonstrating transparent financial management, credible governance systems and sustained infrastructure investment are likely to strengthen their access to financing while improving long-term economic competitiveness.
Drakenstein’s experience illustrates that municipal sustainability is built through institutional reform rather than short-term fiscal interventions. As African governments seek to modernise public finances, improve urban resilience and mobilise infrastructure investment, the municipality’s turnaround demonstrates how disciplined governance, consistent financial management and accountability can strengthen local economies while improving public confidence in municipal institutions. In an increasingly urban Africa, financially sustainable municipalities are becoming essential pillars of national economic resilience and inclusive development.
